Mar 01, 2021

PPP Loan Forgiveness Frequently Asked Questions

If you’ve got questions about Paycheck Protection Program (PPP) loan forgiveness, we don’t blame you. This evolving program has its fair share of unique rules and terms. The good news is that we’re beginning to get a clearer sense of what the new loan forgiveness process looks like.

Here are answers to some frequently asked questions. Bear in mind that this is a living document and we’ll be updating it as new details become available.

What documents are needed for a PPP application?

With millions of business owners seeking these loans, it’s essential that your application is accurate and timely. Otherwise, your chance of getting approved goes down substantially. Here are the key documents to prepare before applying for a PPP loan:

  • Signed application listing anyone with 20% or more ownership (with legal name as it reads on driver’s license)
  • Social Security numbers should also be listed in the ownership section
  • Color copy of a government-issued ID (front and back) for all owners listed on application
  • IRS Form 944 for 2019 or 2019 941s (all 4 quarters)
  • 2020 Form 941 if available, or equivalent payroll processor records
  • Evidence of any retirement and health insurance contributions
  • A payroll statement or similar documentation from the pay period covering February 15, 2020 
  • Payroll register for all of 2019 and all months for 2020 that are available
  • If the payroll summary is in Excel format, it should be accompanied by 12 months’ bank statements
  • If you are an independent contractor, 1099-MISC for 2019
  • If you are self-employed, IRS 1040 Schedule C for 2019 and a 1099-MISC for each self-employed owner

What qualifies for forgiveness?

The following costs and expenses are eligible for loan forgiveness under the Paycheck Protection Program. In order to qualify, all of the costs must be paid or incurred during the covered period.

  • Payroll costs: 
    • Compensation in the form of salaries, wages, commissions, or similar compensation up to $100,000
    • Payment of cash tips or equivalent
    • Payment for vacation, parental, family, medical, or sick leave
    • Allowance for dismissal or separation
    • Payment of retirement benefits
    • Group vision, dental, disability, or life insurance
    • Payment of state or local taxes assessed on the compensation of employees
  • Healthcare costs related to the continuation of group healthcare benefits during periods of sick, medical, or family leave, as well as insurance premiums
  • Mortgage interest payments (but not prepayment or payment of the mortgage principal)
  • Rent
  • Utilities
  • Interest on any other debt obligations incurred before February 15, 2020
  • Refinancing an SBA EIDL received between January 31, 2020, and April 3, 2020
  • Covered expenditures such as business software or cloud computing services that facilitate:
    • business operations
    • product or service delivery
    • the processing, payment, or tracking of payroll expenses, human resources, sales, and billing functions
    • accounting or tracking of supplies, inventory, records, or expenses
  • Covered property damage costs
  • Covered supplier costs
  • Covered worker protection expenditures

What do ‘covered period’ and ‘alternative payroll covered period’ mean?

The covered period refers to the date range that begins the date your PPP loan is disbursed and ends on a date you select between 8 weeks after your PPP loan is disbursed and 24 weeks after your PPP loan is disbursed.

The alternative payroll covered period no longer exists under the recent Economic AID Act. Previously, borrowers were entitled to utilize an alternative payroll covered period, but with the updated changes to your covered period, this option was eliminated.

What types of businesses and entities are eligible for a PPP loan?

The SBA set out to make PPP loans available to a wide range of businesses because the negative impacts of the pandemic are widespread and have hurt many different industries. Here are the eligibility requirements for PPP loans:

  • Business must have been in operation on February 15, 2020, or if you are a seasonal employer, you must have been in operation sometime between February 15, 2019, and February 15, 2020. 
  • Business must have 500 or fewer employees (or 300 or fewer employees if it’s for a Second Draw) or Small Business Concerns as defined in section 3 of 15 USC 632 OR, alternative size standard. An entity is a “small business concern” if the (1) Max tangible net worth of the entity is not more than $15 million, and (2) average net income after federal taxes for 2 fiscal years prior to date of app is not more than $5 MM.
  • Sole proprietors, independent contractors, and self-employed individuals
  • Partners in partnerships can apply — but only 1 PPP application per partnership
  • Accommodation and food service businesses with 500 or fewer employees per physical location for First Draw loans. For Second Draw loans, the business must have 300 or fewer employees and must meet other eligibility criteria. 
    • Each location can now apply for its own PPP loan (this applies to any NAICS 72 entity)
  • Affiliation rules are waived for franchises (affiliation rules are used to determine whether a business is a “small business”—generally, affiliation exists when 1 business controls or has the power to control another business)

Despite the broad qualifications for PPP, that doesn’t mean that everyone in America qualifies for these loans. The following businesses are ineligible:

  • Financial businesses primarily engaged in the business of lending, such as banks and finance companies
  • Life insurance companies (not including independent agents)
  • Businesses located in a foreign country
  • Gambling
  • Private clubs
  • Government-owned entities (but not those owned or controlled by a Native American tribe)
  • SBA loan packagers
  • Any business providing prurient sexual material (i.e., strip clubs)
  • Political or lobbying companies 
  • Recipients of a Shuttered Operator Grant 
  • Those engaged in illegal activity and pyramid schemes
  • Household employers—individuals who employ a housekeeper or nanny 
  • 20% or more owner who has criminal issues or prior default on government debt
  • Organizations currently in bankruptcy or that file for bankruptcy after submitting their PPP application
  • Businesses that weren’t in operation prior to February 15, 2020
  • Permanently closed businesses
  • Securities issuers
  • Senior government officials with a controlling interest in the business
  • Hedge funds and private equity funds

Who do I work with to have my loan forgiven?

Borrowers will have to apply for PPP loan forgiveness through their lenders, and the lender then submits the application to the SBA on behalf of the borrower. A borrower may not submit directly to the SBA for forgiveness. Borrowers can use third-party accounting services to help prepare all the necessary documents and track expenses in order to help submit a complete, clean loan forgiveness application to the lender.

How long will the forgiveness process take once submitted to my lender?

Once you submit your application to your lender, they will have 60 days to review everything. If the document is approved, they will send it on to the SBA. The SBA has 90 days to look over your application.

What if my PPP loan is for $150,000 or less?

Great question! The SBA has announced that borrowers who receive PPP loans of $150,000 or less can use a streamlined forgiveness application and automatic forgiveness. Borrowers will simply be required to submit a 1-page application that lists, among other things:

  • SBA PPP loan number
  • Lender PPP loan number
  • PPP loan amount
  • PPP loan disbursement date
  • Employees at time of loan application
  • Employees at time of forgiveness application
  • The covered period
  • Amount of loan spent on payroll costs
  • Requested loan forgiveness amount

This streamlined process will save you a lot of time and effort. Be aware that the record retention guidelines for these smaller loans have been reduced to 4 years for employee records and 3 years for compliance records.

What can I do if I’m not approved for loan forgiveness?

If you’re not approved for forgiveness, your lender may ask for additional documentation or you may be required to repay the loan. If you are required to repay the loan, the outstanding balance will continue to accrue interest at 1% over the term of the loan.

Can I repay the loan early?

Absolutely! If you decide to repay the loan early, you can do so without incurring any early payment penalties or fees. 

How do I link my bank account in Sunrise?

You can link your bank account in Sunrise in a few simple steps. Start by logging into your account:

  1. Go to “Chart of Accounts” and click “Create Account”
  2. Fill out the form
  3. Click “Link My Bank Account”
  4. Select your bank from the list and enter your credentials
  5. You are all set!

If you need additional assistance with the process, check out our step-by-step instructions here.

What loan forgiveness resources do you offer for free?

Sunrise provides you with free access to our comprehensive do-it-yourself resources and tools. The best place to start is by linking your bank account to Sunrise. This allows our community of PPP Loan Forgiveness Advisors to assess your unique situation and better answer any additional questions you may have.

Features include:

  • PPP Loan Forgiveness application checklist 
  • Dozens of insightful articles
  • Searchable knowledge base
  • Live support with a Loan Forgiveness Advisor 

Can I chat with a Loan Forgiveness Advisor?

Just click the blue chat button at the bottom of the screen. You’ll be connected with a loan forgiveness advisor who will be happy to answer your questions.

Disclaimer: The information provided in this post does not, and is not intended to, constitute business, legal, tax, or accounting advice. All information, content, and materials available in this post are for general informational purposes only. Readers of this post should contact their attorney, business advisor, or tax advisor to obtain advice with respect to any particular matter.

About the author

Grant Olsen
Grant Olsen
Grant Olsen is a writer specializing in small business loans, leadership skills, and growth strategies. He is a contributing writer for KSL 5 TV, where his articles have generated more than 6 million page views, and has been featured on and Grant is also the author of the book "Rhino Trouble." He has a B.A. in English from Brigham Young University.


  1. You state, “The SBA also implemented an “alternative payroll covered period” for those borrowers who elect an 8-week period.”
    The alternative period is also an option for the 24-week covered period.

  2. independent contractor UBER LYFT driver.
    .I am about to get $10,000 PPP loan.

    Until this point, I have received zero guidance on what qualifies as my business expenses and what exactly can I use the 10k to ensure its forgiveable.

    Do I have to wait 8 weeks to start using towards my business expenses or can I right away?

    • Hi Mike,

      There is no 8 week delay in using the funds, although there is for applying for forgiveness. I had to double-check, but according to the SBA ( The following expenses qualify:
      From the SBA FAQ’s (bolding is mine)
      How can a 1099 contractor request a PPP loan? Is the average payroll cost the average
      monthly 1099 amount? Do they add the withholding tax they paid (FICA, FUTA, etc),
      healthcare and costs to get their average amount?
      For a sole proprietor or independent contractor: wages, commissions, income, or net earnings
      from self-employment, capped at $100,000 on an annualized basis for each employee

  3. Want to apply for streamlined PPP loan forgiveness

  4. I am a independent contractor applied for pppl
    and was approved do I pay
    tax on the loan

    • Hi June – The rules regarding taxation on PPP loans vary state by state. You should contact your accountant and tax advisor to discuss the tax implications of PPP loans as Lendio cannot provide this advice.

  5. ppp loanForgiveness

  6. I need financial help

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